Wednesday, March 15, 2017

Do Only Suckers Pay Taxes?

DO ONLY SUCKERS PAY TAXES?

I’ve always
thought of taxes as the price of civilization, and while grumbling along with
everyone else about the tax codes complexity, I have never felt anything but
pride in my ability to contribute larger amounts to our shared enterprise. Once,
when I was audited, I was particularly proud of the fact that the only mistakes
found were in the government’s failure.I ended up with a small refund!!

For many years, I think the vast majority of citizens
shared my view.In recent years,
however, the number of people who disagree with the existence, intent or
performance of the government has increased dramatically and as a consequence, there
seems to be growing acceptance of tax evasion and a near constant chorus of calls
- often from very wealthy people – for lower tax rates.

In my view,
a collective disdain for tax compliance threatens both our solvency and our
form of government.In a large country like the US, where most
people do not run for public office or otherwise participate actively in
governance, preserving representative
government depends, at least in part, on sustaining the rituals of participation
that establish a common interest. In
years past, one of the most important of those rituals was mandatory military
service, which touched virtually every family’s life directly or
indirectly.Mandatory service has given
way to a volunteer military about which most of us know very little and with
which we have little interaction.

Another
weakened ritual is voting. In the most recent Presidential election, only 58%
of eligible voters bothered to cast a ballot; 90 million citizens simply didn’t
bother and by implication, care little about voting rights.

One of the
most important remaining rituals is obeying our tax laws, which rest on a
presumption of compliance.Unhappily, the Congress – which levies taxes
and should seek to encourage honest tax reporting – seems intent on making tax
compliance a “suckers only” game. In
addition to echoing calls for lower taxes, lawmakers have been gradually eviscerating
the IRS, which is no longer capable of enforcing our tax laws. In 2014, the
latest year for which I could find records, the IRS audited less than 1% of all
returns, and only 16% of those returns which reported income of more than $10
million.The reason is simple: fewer
auditors.In 2016, enforcement staffing fell
to less than 16,000, fewer than were on the job back in 2010.

The lack of
investigative manpower leads, inevitably, to widespread tax evasion.Following each of the last several
Presidential elections, one or more cabinet appointees have been revealed as
having failed to pay taxes on household help.Last year, fewer than 200,000 taxpayers paid these taxes, a number
implying massive non-compliance. It doesn’t seem to matter to these evaders
that the helpers will end up, years in the future, without the retirement
benefits everyone needs.

In addition to doing far too few audits, the agency
is doing fewer investigations of identity theft, money laundering, and public
corruption.Moreover, taxpayers seeking
IRS assistance increasingly find their written queries unanswered and the agency’s
telephones unmanned.

None of this
makes sense, since we have a huge tax gap – the difference between the amount
paid and the amount owed – and the IRS is extremely efficient, spending just 35
cents to collect every $100 of revenue collected.Moreover, incremental spending produces huge
incremental gains: for every $1 spent on additional agents, the government
recovers $4 of additional revenue.And
the government needs the money.Last
year’s budget deficit was $587 billion, but more than $450 billion in taxes
went uncollected.Collecting the money due
but unpaid would nearly eliminate the deficit and free up funds that are needed
to improve our infrastructure, improve health care and revitalize our
educational system.

Unhappily,
things seem to be getting worse, not better.The Trump Administration has proposed a 14.1 percent cut to the IRS for
the fiscal year that begins in October, which would reduce the agency’s budget
to about 70% of what it was six years ago.If that proposal becomes reality, agency effectiveness will decline
still further.

I don’t
understand why our government follows policies seemingly designed to minimize
tax collections and create a nation of scofflaws.In years past, Americans mocked countries
unable or unwilling to collect taxes; today, we seemed determined to emulate
them.

There will
always be disagreements about what roles government should or should not take
on.But if we want to sustain self- governance,
we need to recognize that doing so requires adherence to the rule of law,
including calculating and paying all the taxes that are due.Only by doing so can we be sure that citizens
who pay their taxes will see themselves as patriots, not suckers!!!!

3 comments:

Thank you, Mr. Crandall! Just yesterday I was in a discussion about paying taxes. The other person said, "Well, I don't want my taxes going to Syrian refugees." I said, "Well, I do, but I don't want mine to go to the waste, fraud & abuse of the welfare queen defense contractors, But, I pay them." Silence. Then, someone else said, "That's a thing of the past." So, I google & find a Harvard Review article dated 2016 about the tremendous waste, fraud & abuse by defense contractors in Iraq & Afghanistan! These were not uneducated people, but both are/were employed by aerospace/aviation manufacturing companies. I'm frustrated when citizens live in an alternate universe with alternative facts(: I pay my taxes. It's patriotic! BTW - I started my career as a Volunteer in Service to America (VISTA) - the domestic Peace Corps - the most life-changing event in my life - community organizing with migrant farmworkers on the rangeline in Palm Beach County & Immokalee.

Well said, Mr. Crandall. This feeling that only suckers pay taxes is only going to get worse when our leaders (specifically Trump) continue to make people feel that way and continue to promote the notion that "we" (meaning all of us) are overtaxed. To your point, if we did a better job of collecting all the tax that was due, but not paid, we'd be in a much better position to have a rational discussion on how to change the system to ensure a fair distribution of the tax responsibility -- and do it in a much simpler and more transparent manner. But it as to start at the top and Trump must lead the way by showing us how much he's paid (or not paid), the sources of his income and debts he owes (and to whom).